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Where Innovation Is Tradition Effort Certification on Sponsored Projects 2012 CUAV Annual Conference Mike Laskofski George Mason University May 22, 2012.

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Presentation on theme: "Where Innovation Is Tradition Effort Certification on Sponsored Projects 2012 CUAV Annual Conference Mike Laskofski George Mason University May 22, 2012."— Presentation transcript:

1 Where Innovation Is Tradition Effort Certification on Sponsored Projects 2012 CUAV Annual Conference Mike Laskofski George Mason University May 22,

2 Where Innovation Is Tradition Session Agenda Effort Defined Effort Reporting Requirements Federal Audit Environment Payroll Certification: An Alternate Approach Monitoring Effort/Salary Next Steps 2

3 Where Innovation Is Tradition What is Effort? Effort is the proportion of time spent on institutional responsibilities (research, teaching, administration and service) Total effort must equal 100% and is not based on a standard 40 hour week Effort is a “reasonable” estimate Effort does not include outside activities 3

4 Where Innovation Is Tradition 4 Why is Effort Reporting Important? Salary and wages account for nearly 60% of all sponsored expenditures Effort reporting is mandated by the federal government for recipients of federal funds Key area of focus by auditors to verify what was proposed was actually done Avoid audit disallowance that can result in negative financial and reputational impacts

5 Where Innovation Is Tradition 5 Federal Regulations OMB Circular A-21 (Section J.10) OMB Circular A-110 OMB Circular A-133 Disclosure Statement (DS-2)

6 Where Innovation Is Tradition OMB Circular A-21 Section J10 Incorporated into the official records of the institution Reasonably reflect the activity for which the employee is compensated by the institution After the fact confirmation or determination of the reasonableness of salary allocations Incidental work can be excluded 6

7 Where Innovation Is Tradition OMB Circular A-21 Section J10 Confirmed by responsible persons with suitable means of verification that work was performed Reflect categories of activities expressed as a percentage distribution of total activities Significant changes must be identified and entered into the payroll distribution system System provides for an independent internal evaluation 7

8 Where Innovation Is Tradition Effort in an Academic Setting ….it is recognized that, in an academic setting, teaching, research, service, and administration are often inextricably intermingled. A precise assessment of factors that contribute to costs is not always feasible, nor is it expected. Reliance, therefore, is placed on estimates in which a degree of tolerance is appropriate. 8

9 Where Innovation Is Tradition 9 PI Effort Reductions Prior sponsor approval required for, “The absence for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator.” A-110 C.25(c)(3)

10 Where Innovation Is Tradition 10 Intra University Consulting Since intra university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution….(J10d(1))

11 Where Innovation Is Tradition 11 How Much Effort is Enough? …most Federally-funded research programs should have some level of committed faculty (or senior researchers) effort, paid or unpaid by the Federal Government. This effort can be provided at any time within the fiscal year (summer months, academic year, or both). OMB Clarification Memo dated January 5, 2001

12 Where Innovation Is Tradition Effort Reporting Cycle Appointing Faculty & Staff Preparing the Proposal Budget Charging Salary Certifying Effort 12 Employment terms No. of months FTE Base Salary Effort proposed; commitment to sponsor Salary is charged Cost share tracked Adjustments to salary processed timely Effort certified after activity completed

13 Where Innovation Is Tradition Effort Reporting Audit Environment Routinely included in IG audit plans History of costly effort related audit disallowances for universities NSF recently completed 16 effort reporting audits and a capstone report with findings and common themes is in process Grant reform initiatives attempting to balance administrative burden and compliance 13

14 Where Innovation Is Tradition University Audit Settlements Yale$7.6M Northwestern$5.5M Cornell$4.4M UAB$3.4M Johns Hopkins$2.6M Harvard $2.4M Duke$1.7M St. Louis University$1.0M 14

15 Where Innovation Is Tradition Effort Reporting Compliance Issues Inadequate effort reporting system Failure to distribute and collect effort reports in a timely manner Effort reports certified by individuals without suitable means of verification Failure to account for all institutional effort 40 hour work week instead of 100% effort 15

16 Where Innovation Is Tradition Effort Reporting Compliance Issues Failure to adjust for significant changes in effort Faculty charged 100% to sponsored research Failure to account for cost shared effort including voluntary commitments Failure to request approval for PI effort reductions Lack of independent method for ensuring the system’s effectiveness (A-133 audit insufficient) 16

17 Where Innovation Is Tradition Payroll Certification: An Alternate Approach 17

18 Where Innovation Is Tradition Effort Reporting: Why Change? Effort incurred across multiple activities is difficult to measure Effort reports provide limited controls Administration is inefficient and costly George Mason needed a more efficient process for growing research portfolio (expenditures up 50% from FY07 to FY10) 18

19 Where Innovation Is Tradition Federal Demonstration Partnership Federal Demonstration Partnership (FDP) began in 1986 and is a cooperative initiative among 10 federal agencies and 119 research institutions FDP is focused on reducing the administrative burdens associated with research 2005 FDP survey of over 6,000 faculty reported that 42% of time on federal awards spent on administrative tasks George Mason became an FDP member in

20 Where Innovation Is Tradition Payroll Certification: What is it? Payroll Certification is an alternative to Effort Reporting that uses a project based methodology and utilizes the concept that “charges are reasonable in relation to work performed” 20

21 Where Innovation Is Tradition Payroll Certification: Benefits Concept is straightforward and easy to understand by faculty and administrators Certification timeframe consistent with project period and annual technical reporting Smaller group of certifiers allows for more effective outreach and training More time to focus on key internal controls Reduced administrative burden 21

22 Where Innovation Is Tradition Payroll Certification: Approval Mason received approval from the FDP and the Office of Naval Research (ONR) effective January 1, 2011 to pilot Payroll Certification George Mason was the first school to receive approval for Payroll Certification Three other pilot schools – UC Irvine (HHS), UC Riverside (HHS), Michigan Tech (ONR) 22

23 Where Innovation Is Tradition Pilot Proposal Conditions All awards transitioned by January 1, 2012 Update policies/procedures, revise DS-2, deploy training and provide ONR detailed milestone plan for implementation Provide feedback to FDP semi-annually DCAA review of DS-2 for adequacy Meet with ONR quarterly to review implementation Review pilot progress regularly but no stated end date 23

24 Where Innovation Is Tradition Payroll Certification vs. Effort Reporting DescriptionEffort ReportingPayroll Certification System FocusIndividualsProject (Grant or Contract) Timeframe for Distribution Consistent points in timeEnd of Project Budget Year Certification Frequency Three Times per YearAnnually Types of FundingAll Sponsored FundsFederal Funds Annual # of Reports ApproversIndividuals charged to projects Principal Investigator System RationaleEffort reasonable based on overall institutional effort Salary and wage amounts reasonable based on work performed Committed Cost Sharing Shown as percentage of overall institutional effort Shown as amount reasonable based on work performed 24

25 Where Innovation Is Tradition Payroll Certification Report Samples 25

26 Where Innovation Is Tradition 26

27 Where Innovation Is Tradition 27

28 Where Innovation Is Tradition Payroll Certification Process OSP generates reports 60 days after the last day of the month for the anniversary date or project end date, whichever is sooner Reports distributed to Payroll Certification Liaison Payroll Certification Liaison works with PIs to obtain approval 28

29 Where Innovation Is Tradition Payroll Certification Process cont. Payroll Certification Liaison returns reports to OSP within 45 days of distribution Reports not received within 45 days sent to Dean for follow-up and completion within 2 weeks Any reports not certified within 60 days will result in salary charges moved to a non- sponsored source of funding 29

30 Where Innovation Is Tradition Assessment of Payroll Certification Comparison to “old” effort reporting process Survey completed February 2011 (150 respondents; majority faculty) to benchmark effort reporting process Payroll Certification follow-up survey will be completed Summer/Fall 2012 Ongoing discussions with various groups on campus to solicit feedback 30

31 Where Innovation Is Tradition Assessment of Payroll Certification Through twelve reporting cycles (Jan thru Dec 2011) 67% of reports received within 30 days compared to 33% under prior process in % of reports received within 45 days 100% of reports received within 60 days DCAA DS-2 adequacy review completed Fall 2011 with no findings Feedback from faculty and administrators continues to be very positive 31

32 Where Innovation Is Tradition Monitoring Effort/Salary Include some level of PI effort on all projects Request sponsor approval if PI is absent for more than 3 months or 25% reduction in PI time Avoid charging faculty 100% to sponsored funds if they have other responsibilities Process funding change forms timely (avoid cost transfer issues) 32

33 Where Innovation Is Tradition Monitoring Effort/Salary cont… Include complete explanations and necessary approval signatures Track committed cost share with activity code Complete payroll certifications timely Avoid funding adjustments after project period previously certified Review project expenses regularly 33

34 Where Innovation Is Tradition Next Steps for George Mason Pilot Solicit feedback from Mason faculty and staff Ongoing training and outreach Regular updates to FDP on pilot progress Meet with ONR quarterly ONR review Fall 2012 Internal Audit review Fall 2012 IG Audit

35 Where Innovation Is Tradition Next Steps Beyond FDP Pilots Advanced Notice of Proposed Guidance published February 28, discusses exploring alternatives to time and effort reporting and makes reference to FDP Pilots Universities continue to look for ways to streamline processes and reduce administrative burden Wait and see results of grant reform efforts 35

36 Where Innovation Is Tradition 36 Questions Mike Laskofski Associate VP of Research Operations George Mason University (703)


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